923|Recruitment & HR is a member of BXNetworking. It comprises networking groups, right across Sydney where small businesses meet. As their in-house HR expert, I created an article for the BXNetworking magazine and a corresponding Webinar on Employing in a Creative Manner. Here’s is an excerpt just for you … for the rest – you will have to read the BXMagazine!
Many businesses operate in highly competitive environments, typified by low barriers to entry, inflationary pressures and sophisticated consumers. Small business is a tough environment!
There has been massive increases in fines for both corporations and individuals who breach the Fair Work Act, as well as increasing the powers of the Fair Work Commission to investigate and collect evidence. The key point, is that if you are found to be in serious breach of the FWA, the fines are now $126,000 for individuals and up to $630,000 for companies. This is a ten-fold increase and over a half a million in fines for a small business, would wipe out most of us.
I can hear the collective groan … small business is hard enough, employing people is hard enough, the rates are high, there are penalty rates, allowances, overtime, super, Long Service Leave … how can we continue to make a living for ourselves and keep our people in work?
As a HR strategist, businesses employ me to assist them to define strategies to manage employment costs, increase productivity, engage workers and ensure return on their human capital investment. When faced with rising employment costs and shrinking margins, small business needs to ensure compliance (because who can afford those fines right?) but at the same time, work within the law to devise creative options that can save you money while not increasing your employment risk. Here are my four top points to employ safely, creatively and make money!
1. Build pipelines of youth workers creating better leverage, imitating the successful fast food model: The fast food industry model, relies on labour cost cutting through employing junior staff, working for a percentage of adult equivalent rates. A research study, with almost half of the participants having commenced as young as fifteen, showed that employers had a possible six years’ worth of junior rates. Fuelling phenomenal growth of the Fast Food Industry (Allan, Bamber and Timo 2005), this cost minimisation strategy can, in some aspects, be duplicated in other industries. Build a pipeline of young workers, keen for weekend and other work who benefit from gaining employment experience.
2. Utilise Individual Flexibility Agreements: Flexibility clauses in awards allows an employee and employer to vary certain terms of the award including arrangements for when work is performed; overtime rates; penalty rates; allowances; and leave loading. While the employee must be better off overall, this allows both parties to find mutually agreeable terms; for example, non-monetary benefits may be paid in lieu of monetary entitlements.
3. Reduce payroll frequency: Most awards allow a variety of frequencies for payment of wages such as weekly, fortnightly or monthly. Increase weekly to fortnightly payments, reducing administrative costs, or move to monthly if your workforce agrees. Introduce this procedure with innovation, such as at time of pay increases.
4. Reduce overtime hours and penalty payments: Reduce overtime hours through better rostering systems, with stronger understanding of part time and ordinary work hours. Additionally, look to see if your award allows for time off instead of payment for overtime. Look at payment of penalty rates on weekends and public holidays. If income on these days is not in excess of penalties, review the commercial decision to operate.
Finally, find a great HR company, like 923|Recruitment & HR to assist you to become successful and compliant in businesses, understand the complexities of the laws in which you operate and develop clever initiatives that enable you to drive economic outcomes while remaining on the right side of the law!
Important Note: These articles have been prepared for general circulation and are circulated for general informational purposes only; these articles should not be regarded as business or investment advice. The articles represent the views of the writers and are subject to change without notice. Additionally, while every care has been taken in the preparation of the articles no representation or warranty as to accuracy or completeness of any statement is given. An individual or organisation should, before any business or investment decision is made, consider the appropriateness of the information in this document, and seek professional advice, having regard to objectives, situation and needs. This document is solely for the use of the party to whom it is provided.